Investment group closes on 10,000 dairy cattle goal with latest farm buy

The group bought 11 dairy farms for $62.5 million from Xianfeng Lu's Van Dairy Group in 2021.

The group said it now owns enough land in Tasmania and south-west Victoria to run 10,000 dairy cattle.

This time Prime Dairy, the dairy arm of Melbourne-based fund manager, bought a 700 hectare (1730 acre) dairy.

Prime Dairy said it was the latest acquisition "as part of a buying spree in the region which the group commenced during 2020".

It is believed to have paid around $15 million for Woolnorth dairy.

Prime Dairy's general manager (dairy Investments) Kirsti Keightley said the latest buy finalises the dairy assets for the Prime Value Dairy Trust, which closes to new investors on June 30.

"We have achieved what we set out to do in 2019, having built a dairy business across 5000ha (12,355 acres) in northwest Tasmania and southwest Victoria, and have enough land to have reached our goal of 10,000 dairy cows," Ms Keightley said.

"This latest 'inside the gate' purchase adds significantly to our Tasmanian holdings, which are some of the best dairy producing land in Australia."

Prime Dairy says it has "committed significant capital" on the dairy farms it had bought to "deliver strong dairy production.

"We're now seeing the rewards from significant investment in the region, which we first commenced in 2020 and ramped up in 2021.

"Our dairy production was up 35 per cent over the last year, which will improve profits, and we expect significant further growth to come," Ms Keightley said.

"We now have the assets to grow more grass and to achieve more high quality dairy production.

"There is enough support land to winter all our cows and to grow young stock.

"We have built huge new effluent dams and pivot irrigations, and have significantly reduced the need for chemical fertilisers."

Ms Keightley said the supply and demand dynamics in Australia would continue to support dairy farmers.

"Australia has a growing population and needs 70-75pc of its dairy production just to meet local demand.

"There is also a strong export market for more quality dairy product.

"These dynamics, along with the Dairy Code of Conduct and the minimum dairy price are driving more growth and confidence across the industry," Ms Keightley said.

Prime's dairy fund targets a minimum 12pc return over the medium-to-long- term, including distributions of 5-7pc paid quarterly, with returns derived from a combination of regular income from milk sales and land value appreciation.

Chinese businessman Xianfeng Lu bought the massive Woolnorth dairy aggregation in 2016 for $280 million.

Van Dairy, formerly Moon Lake Investments and Van Diemens' Land Company before that, has attracted a lot of attention over its foreign ownership and farm operations.

The company once milked more than 11,000 cows across 17,000ha as one of Australia's biggest and oldest dairy operations producing more than 100 million litres of milk annually.

At the time of the Prime Dairy purchase of 11 farms in 2021, Mr Lu, who has been living at Woolnorth, said these smaller farms were sold as part of a commitment to have 10 per cent Australian ownership of the property.

Van Dairy also sold the 900 hectare Harcus Dairy which was part of the key Woolnorth group of properties about the same time.

Mr Lu sold Harcus Dairy, part of the Gums dairy and the Heifer Unit near Smithton, to Tasmanian-born businessman Tim Roberts-Thomson.

The Roberts-Thomson company - TRT Pastoral Group - also owns land in Victoria and on King Island and is believed to have taken about 6000ha of Woolnorth in total.

There has been criticism in the past over the operational strategy used at the Van Dairy farms which has seen a big lift in herd sizes but questions were asked about disposal of the increased effluent.

Mr Lu's bought the Van Diemens' Land Company in 2016 after it had been owned by several overseas companies over the years notably from the UK and New Zealand.

ABARES is forecasting the Australian farmgate milk price to fall 6pc in 2024-25.

It is also forecasting a 1pc fall in milk production.

The report says the 2023-24 price is forecast to fall by 4pc to 72 cents a litre ($9.49 per kilogram of milk solids).

This is significantly higher than ABARES forecast in March 2023, when it said the 2023-24 prices would fall 14pc to be 62.5c/L ($8.22/kg MS) in 2023-24.